If you are researching ways to finance your higher education, you must have come across a term called education loan sanction letter. It is considered to be one of the most important documents of your loan approval process. But what exactly is it? Find out the details in this article.
What is an Education Loan Sanction Letter?
When you apply for a loan, you provide a set of documents along with the application form. The lender examines these documents and decides whether you are approved for the said loan amount and terms. Once approved, the institution sends a document informing you, the borrower, that you have successfully applied and received approval for the loan. This document is the sanction letter.
Thus, the sanction letter is an official document informing you that you have been approved for your education loan application. It contains all the necessary information about your loan application, such as the loan amount, your name, loan tenure, interest rate, terms and conditions, etc. After this, the lender sanctions the loan amount, and it reaches your account.
This document is only provided after you successfully apply for the loan. Soft inquiries such as contacting the financial institution representatives to understand the loan terms are not considered a loan application.
Sometimes universities require proof of financial capability before granting admission to students aspiring to study overseas. Others require a visa permit as well. However, traditionally, financial institutions require proof of admission into a university and student visa to give the sanction letter. In such cases, you can apply for a pre-approved loan sanction letter.
Once the financial institution approves and sanctions your loan application, you will receive a sanction letter. Here’s how and when you can expect to get it:
Step 1: When you submit your loan application form along with all required documents, the lender will review your application.
Step 2: Once they approve your application, they will issue a sanction letter outlining the terms and conditions of the loan.
Step 3: The lender will send you the sanction letter by post or hand it over to you physically.
You can use this sanction letter as proof of funds for your education expenses.
What is a pre-approved sanction letter?
Students typically need to produce their university admission proof to secure an education loan. However, sometimes, universities might require a loan sanction letter before they grant you admission. This is where a pre-approved sanction letter helps.
It is a document issued by a financial institution stating approval for an education loan without finalizing all the details. It shows that the lender has reviewed your application and documents and is willing to provide a loan up to a specified amount, pending final verification and approval.
Format of an education loan sanction letter
The format of an education loan sanction letter can vary depending on the lender. However, it typically includes the following components:
– Addressed to the borrower and co-borrower: The sanction letter is typically addressed to both the borrower and the co-borrower.
–Comprehensive loan information: It contains detailed information about the approved loan amount, interest rate, and repayment terms.
– Date and validity: The sanction letter is dated, and its validity period is clearly mentioned.
Sample of an education loan sanction letter
Since the format of an education loan sanction letter varies from lender to lender, here’s a general sample you can expect:
Education Loan Sanction Letter
ABC Lender
To,
Date: XXX
[Student’s Name]
[Address]
[Phone Number]
[Co-Borrower’s Name]
[Address]
Dear Sir/Ma’am,
Subject: Education loan sanction of Rs. 50 lakhs
We are pleased to inform you that your application for an education loan with [Lender’s Name] has been approved, subject to the terms and conditions outlined below:
Name of the borrower
[Student’s name]
Name of the co-borrower
[Co-borrower’s name]
Course details
[Course], ]University]
Amount sanctioned
Rs. 50 lakhs
Rate of interest
12% per annum
Type of interest
Floating
Repayment period
Repayable in 120 equated monthly instalments of Rs. 45,000 each
Processing fee
Rs. 5,000
Loan account number
XXXXXXXXXXXX
Loan account branch
[Lender’s address]
Documents Required for the Sanction Letter
The documentation requirements for the education loan sanction process vary across lenders. However, there are a standard set of documents that most lenders ask for. They are as follows:
A correctly filled loan application form.
Academic record.
Identity proof such as PAN Card, AADHAR card, etc.
Proof of address.
Proof of admission.
Statement of educational expenses such as the tuition fee, hostel fee, cost of accessories for education, and related costs.
Income proof of the loan applicant or co-applicant.
Bank statement of the loan applicant or the co-applicant.
The education loan sanction letter process involves several steps, such as:
1. Selecting a lender
Start by researching and selecting a suitable lender that offers competitive education loans. Compare interest rates, repayment terms, processing fees, and customer service reviews to make an informed decision.
2. Gathering all the required documents
Once you’ve selected a lender, gather all necessary documents required for the loan application. This includes the admission letter from the university, academic records and certificates, income proof of co-borrower, etc.
3. Paying the processing fee
Complete the loan application form and submit it along with the required documents. Pay the processing fee, which covers the cost of verifying documents, conducting credit checks, and processing your application.
4. Waiting for approval
Once you submit the application, the lender will review your application and documents. They will assess your eligibility based on factors such as academic performance, credit history, and repayment capacity.
5. Sanction letter issuance
After approving your loan application, the lender will issue a sanction letter outlining the approved loan amount, interest rate, repayment schedule, and other terms and conditions.
Parting thoughts
Securing the sanction letter for education financing can be challenging if you do not have the correct information. This article should empower you with the knowledge to ensure hassle-free approval of your loan sanction letter.
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1. How do I get an education loan sanction letter?
To get an education loan sanction letter, you need to apply for an education loan with a financial institution. Once your application is approved, the lender will issue a sanction letter.
2. What happens after an education loan is sanctioned?
After an education loan is sanctioned, you will receive a sanction letter from the lender. You may have to sign and return a duplicate copy of the sanction letter to acknowledge receipt and acceptance of the loan terms.
3. How many days does it take to issue an education loan sanction letter?
The time taken to issue an education loan sanction letter can vary depending on the lender’s internal processes. It can take anywhere from a few days to a couple of weeks.
4. Would there be any delay in getting an education loan sanction letter?
There might be a delay in getting an education loan sanction letter if you submit incomplete documentation or if there are additional verification requirements. Make sure to verify all details you provide to avoid delays.
5. What is the sanction limit for education loans?
The sanction limit for an education loan varies depending on factors such as the course, university, and the lender’s policies. Please check the relevant product page for more information.
23 September 2024
7 mins read
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